THE Bureau of Internal Revenue (BIR) said it formed a task force to inspect compliance with the government’s order to resume on-site work for economic zone locators in the Information Technology-Business Process Management (IT-BPM) industry.
In a statement on Wednesday, BIR Deputy Commissioner Arnel SD. Guballa said that mission orders have been issued authorizing inspections at the places of business of economic zone locators, known as Registered Business Enterprises (RBEs).
The IT-BPM sector, which is also known as the business process outsourcing (BPO) industry, is granted tax breaks on the condition that it performs all its work in economic zones. The on-site work rule was suspended during the pandemic, allowing most of the industry’s employees to work from home, but the government allowed this suspension to lapse at the end of March with the decline in the coronavirus case count.
“IT-BPM firms were temporarily allowed by the Fiscal Incentives Review Board (FIRB) to resort to ‘work-from-home’ (WFH) arrangements without losing incentives granted to them as economic zone (ecozone) locators so they could continue doing business offsite at the height of the pandemic. The WFH arrangements for RBEs were allowed up to March 31, 2022,” the BIR said.
“Under Section 309 of the National Internal Revenue Code (NIRC) of 1997, as amended by CREATE, RBEs and/or registered activities must be conducted within the geographical boundaries of the ecozone or freeport where they are located to be entitled to fiscal incentives,” it added.
The BIR was referring to Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Finance Secretary Carlos G. Dominguez III has taken the position that such businesses are free to extend WFH arrangements, but must do so without benefit of incentives.
“No one is prohibiting them or impinging on their management prerogative to continue implementing their WFH setups. However, they must give up the tax incentives they currently enjoy because the law is clear on this,” Mr. Dominguez said.
Finance Assistant Secretary Juvy C. Danofrata said that ecozones and freeports were designed to promote export activity and permit the free flow of goods and services within these areas.
As a result, Ms. Danofrata said tax incentives are given to priority projects or activities carried out in these zones.
“The government has exercised significant caution in balancing the economy’s needs and the health requirements to address concerns the pandemic caused. However, we believe that the current situation already allows us to direct our policies towards fully reopening the economy,” Ms. Danofrata said.
“Given the increasing vaccination rate of Filipinos nationwide, we can now undertake safety measures for the physical reporting of employees. In fact, the President has ordered all government agencies and instrumentalities to adhere to the 100% on-site workforce under Alert Level 1,” she added. — Revin Mikhael D. Ochave